The new financial year along with it brings
new rules too.
As an investor it is your duty to be
updated with any new rules since these can and do affect your finances directly
or indirectly.
Being updated with new rules if any from time to time helps you better understand if you need to take any action with how you manage your finances and if you do then what should these actions should be.
How are Debt mutual
funds taxed presently?
Debt mutual funds invest in government
securities, debentures, corporate bonds, etc. unlike equity mutual funds which
invests primarily in equity and equity related instruments.
They provide lower returns than equity
mutual funds but more safety.
They are less volatile than equity mutual
funds and are more suited for short term goals.
LTCG
For debt mutual funds, long term capital
gains tax is applied on gains from debt mutual funds held for more than 36
months.
The LTCG rate for debt mutual funds is 20%
after indexation.
STCG
For debt mutual funds, short term capital
gains tax is applied on gains from debt mutual funds held for less than 36
months.
Short term capital gains are added to your
income and taxed as per your income tax slab.
How will debt funds
be taxed now?
Presently debt mutual funds held for more
than 36 months would attract a LTCG tax of 20%.
The indexation benefit was added to it due
to which the cost price would go up which in turn would bring down profit.
Lower profit would mean lower LTCG tax.
This will not be the case for investments
made in debt mutual funds from 1st April 2023 onwards.
Going forward there will be no dual
benefits of LTCG tax & indexation and instead all gains will be added to
your income and will be taxed as per your income tax slab.
This will be applicable for all funds
investing less than 35% in domestic stocks, therefore this rule will be applicable
to international and gold funds too along with debt funds since they would be
treated at par.
Mahila Samman Savings Certificate
This particular scheme is open to
investments only for women.
Investments will be accepted into this fund
only from 1st April 2023 to 31st March 2025.
The investment tenure will be of two years
with partial withdrawals allowed.
The maximum investment amount permitted is
of 2 lakhs (only once) with interest rate of 7.5 % annually.
Senior
Citizens Savings Scheme
This is a government backed scheme.
As the name itself mentions, this scheme is
only available for senior citizens.
The deposit limit (one time investment) has
been raised from Rs 15 lakhs to Rs 30 lakhs.
The interest is paid on a quarterly basis.
New
Income Tax Regime
Under the new tax regime, income up to 7
lakhs will be tax free.
The old tax regime will continue as it is.
A standard deduction of 50,000 has been
granted and extended to the new tax regime as well.
|
New Income Tax Regime |
|
|
Income |
Tax Rate |
|
3
to 6 lakhs |
5
% |
|
6
to 9 lakhs |
10
% |
|
9
to 12 lakhs |
15
% |
|
12
to 15 lakhs |
20
% |
|
Above
15 lakhs |
30
% |
Beyond the standard deduction of 50,000, the
usual tax exemptions in the form of ELSS mutual funds, HRA, LIC premium cannot
be claimed under the new tax regime.
The new tax regime is the default option
now meaning you will need to opt for the old structure voluntarily in case you
wish to.
Surcharge on annual income above 5 crores
has been reduced from 37% to 25%.
|
Old Income Tax Regime |
|
|
Income |
Tax Rate |
|
0
to 2.5 lakhs |
Nil |
|
2.5
to 5 lakhs |
5
% |
|
5
to 10 lakhs |
20
% |
|
10
lakhs and above |
30
% |
Under the old tax regime, those earning up
to 5 lakhs can avail of rebate, meaning no tax.
Those earning beyond 5 lakhs can make use
of tax saving instruments like HRA, ELSS mutual funds, etc.
Insurance policies
Income benefits from all policies (except
ULIPS) with an aggregate premium of more than rs 5 lakhs will now be taxable.
This has been brought into effect since the
underlying belief in the past was that the exemption was misused by
individuals.
However in the unfortunate scenario of the
policy holder passing away, the proceeds of the policies will be tax free.
The new tax laws will be applicable only
for policies issued on or after April 1, 2023.
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